Sadly, Ed Yardeni is the Wanker of the Day – wage stagnation edition
by New Deal democrat (re-posted with permission from Bondadd blog)
Sadly, Ed Yardeni is the Wanker of the Day – wage stagnation edition
Dr. Ed Yardeni has some clickbait up at his blog titled, The Wage Stagnation Myth.
Yardeni is a highly-regarded financial markets analyst, but this is just sad.
He writes that
There is a widespread myth that real incomes have been stagnating for many years. That’s apparently true based on real median income for households…. [but]
real pre-tax compensation per payroll employee (including wages, salaries, and supplements) is up … 16.8% since the start of 2000.
Real wages and salaries in personal income is … up 14.6% since the start of 2000. Real average hourly earnings of production and nonsupervisory workers i sup … 13.4% since the start of 2000.
In the first place, like so many others, he starts by conflating wages and income, setting up a straw man. No, Dr. Ed, the fact of wage stagnation is not based on income metrics, but on wage metrics. To give you a head start, here are 7 of them I helpfully catalogued in a post only one month ago.
Secondly, note that all of Yardeni’s metrics appear to be mean, not median, measures. You remember the old saw about Bill Gates walking into a bar, and now the mean wealth of the patron is $1 billion. That’s what Yardeni does. When you measure in median, not mean terms, wage stagnation is blazingly apparent.
The only measure he cites which might possibly be a median measure (“real pre-tax compensation,” he doesn’t name the data series), includes “supplements.” Whether these are management bonuses or e.g., health benefits, they hardly are contrary evidence. We know that health cost inflation has soared for several decades. That companies may have picked up some of these has nothing to do with actual wages.
That a premier Wall Street analyst is so blind to the blazingly bright evidence is, sadly, not shocking at all.
Well regarded economist does not equal well regarded reporter. Sad to say.
Considering the fact that health-care insurance as compensation began as a way to side-step a government ban on wage increases during WW2, I can’t imagine how the following statement can be true: ” That companies may have picked up some of these has nothing to do with actual wages”.
Ray L-L
i agree with you. if health care costs are going up astronomically, the inclusion of health insurance as part of compensation is most definitely an increase in “wages.”
this doesn’t mean i disagree with New Deal Democrat on the main issue, but I do like it better when “my” side is a little more careful with the facts.
Coberly, I respectfully disagree. Assuming Yardeni was referring to benefits, they are not wages. They are a form of non-wage compensation, a distinction the BLS itself makes in connection with, e.g., data series ECIWAG (median wages) vs. ECICOM (median compensation).
new deal democrat
no need to be respectful
we seem to have very different ideas about words.
perhaps “wages” is a technical term of art. nevertheless when folks are offered “benefits” those are properly understood as “instead of cash wages” because of advantages to either the boss or the worker.
if i took ALL of my “pay” in the form of “benefits” health care and retirement for example, i could not seriously argue that i was working for free, or if, as is likely, the costs of health care (and the “benefit” )rose over time, i could not say my “pay” was not increasing.
if you insist that “wages” has the narrow “technical” meaning, you will be misleading most people and losing credibility among those who realize that “hey he’s not counting benefits!”
up to you of course, but i hate it when people tell me “my side” is lying.
leave that kind of gaming to the blahouses and their ilk.
This was on the Market Watch site today:
http://blogs.marketwatch.com/encore/2014/10/02/incomes-are-much-lower-than-you-think/
Alicia Munnell is Director of Center for Retirement Research at Boston College.
I won’t parse whether by ‘income’ she includes benefit packages with wages. I’ll leave that to others.
If you subscribe to the argument that health insurance benefits are deferred wages, what do we make of the fact that more and more companies (my pre-retirement employer included) have been continually upping the amount the employee has to pay for said “benefit”?
In addition to co-pays rising, deductibles rising, we’ve seen an increase in the numbers of employers who require their employees to pony up ever more of the cost of premiums.
Sandi
the employers are cutting your benefits because that’s how they can cut your wages. Which is why benefits ARE wages.
and i do not doubt that “wages” are declining. my argument with NDD is just that by ignoring benefits as part of wages he looks like he is trying to hide something. i see enough of that from the other guys.